Dividend yields have been under pressure in recent years. Several factors played a role in this return compression. Formerly profitable sectors such as energy and real estate have suffered a rapid dividend cut due to the difficult conditions in these sectors. Tech companies now prefer share buybacks over dividends. Add to this rising share prices and the average dividend yield of companies in the S&P 500 has dropped to 1.3%.
However, there are still some solid options for the high yield investor. Three Dividend stocks with returns more than double the S&P 500 Agree real estate (NYSE: ADC), Brookfield Infrastructure (NYSE: GDP)(NYSE: BIPC), and Trust for medicinal properties (NYSE: MPW). Because of this, they stand out as solid options for high yield investors.
Focused on the right type of retail property
Agree Realty is a real estate investment trust (REIT), which owns freestanding retail locations. While retail properties have come under pressure as more and more people are relocating their purchases online, this trend has not had much of an impact on Agree Realty’s tenants. That’s because the company focuses on retail locations leased to hardware stores, grocery stores, dollar stores, pharmacies, and auto parts and service centers that are less prone to disruption from e-commerce. In addition, the company focuses on financially strong retailers who mostly have investment grade ratings.
These features allow the company to generate stable rental income that it can use to prop up its 3.6% monthly dividend. The company also has an investment grade balance sheet. This gives her the financial flexibility to further expand her portfolio. Agree Realty currently expects to spend between $ 1.1 billion and $ 1.3 billion on additional acquisitions this year. This should allow the company to grow its cash flow and keep increasing its dividend. Agree Realty has already grown its payout at an average annualized rate of 4.5% over the past 10 years, including an 8.5% increase last year.
Lots of fuel to keep growing
Brookfield Infrastructure has a globally diversified portfolio of critical infrastructure assets such as pipelines, power lines, toll roads and ports. These assets generate stable cash flow that Brookfield uses to support its dividend with a yield of 3.7%.
One thing that stands out about Brookfield’s dividend is its steady growth. The company has increased its payout every year since it was founded in 2009. This upward trend appears to be continuing for the foreseeable future. Brookfield estimates it can grow cash flows from its existing businesses by 6% to 9% annually over the coming years, driven by inflation-driven contract rate increases, expansion projects, and higher volumes as the global economy grows. Additionally, Brookfield believes acquisitions can increase its annual cash flow per share by 1% to 5%. This should slightly aid his plan to increase his payout by 5 to 9% annually.
A healthy payoff
Medical Properties Trust is a REIT focused on owning hospitals. It rents these facilities to hospital operators under long-term contracts who generate a steady cash flow. The company uses this money to pay its dividend with a yield of 5.5%.
The REIT has an excellent history of growing that dividend. It has increased its payout for each of the past eight years, increasing the payout at an average annual rate of 5% over that period. The driving factor was a steady diet of acquisitions.
Medical Properties has already secured $ 3.4 billion in new investments this year. That should give the company enough fuel to keep growing its dividend. Meanwhile, it has a solid financial profile and extensive acquisition opportunities that should allow it to keep growing its portfolio, cash flow and dividend for years to come.
Excellent options for high yield investors
While it becomes increasingly difficult to find dividend stocks with higher yielding returns, there are strong options out there. What sets Agree Realty, Brookfield Infrastructure and Medical Properties apart from most of the others is that they have returns twice that of the S&P 500, and they expect to keep those payouts growing in the years to come. This should enable them to generate attractive total returns for their investors.
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